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Saudi Arabia's oil price target revealed

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Saudi Arabia's oil price target revealed
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Saudi Arabia wants crude oil prices to rise to around $60 a barrel this year.

That is according to a report by the Reuters news agency quoting sources from OPEC countries and the oil industry.

Around $60 is the level the Saudis and their Gulf allies – the United Arab Emirates, Kuwait and Qatar – believe would encourage investment in new fields but not lead to a jump in output by US shale oil producers.

An agreement last November by OPEC and other major producers to pump less pushed up prices by $10 a barrel and appears to be holding, but analysts expect benchmark Brent crude to be short of $60 this year, averaging $57.50 dollars a barrel.

In recent weeks it has been trading around $56 a barrel.

The problem for the traditional producers like Saudi Arabia is that the break-even price for US shale oil producers fell last year to an average of $35 per barrel, according to a report from consultancy Rystad Energy issued earlier this month.

US shale producers started to step up production again when crude prices first topped $50 a barrel in May 2016. Advances in technology have made it easier for them to adapt quickly to oil price fluctuations.

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